Correlation Between US Financial and Sirona Biochem

Can any of the company-specific risk be diversified away by investing in both US Financial and Sirona Biochem at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining US Financial and Sirona Biochem into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US Financial 15 and Sirona Biochem Corp, you can compare the effects of market volatilities on US Financial and Sirona Biochem and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in US Financial with a short position of Sirona Biochem. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Sirona Biochem.

Diversification Opportunities for US Financial and Sirona Biochem

-0.14

Correlation Coefficient

US Financial  Sirona Biochem

Good diversification

The 3 months correlation between FTU-PB and Sirona is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Sirona Biochem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirona Biochem Corp and US Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on US Financial 15 are associated (or correlated) with Sirona Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirona Biochem Corp has no effect on the direction of US Financial i.e., US Financial and Sirona Biochem go up and down completely randomly.

Pair Corralation between US Financial and Sirona Biochem

Assuming the 90 days trading horizon US Financial is expected to generate 30.51 times less return on investment than Sirona Biochem. But when comparing it to its historical volatility, US Financial 15 is 3.69 times less risky than Sirona Biochem. It trades about 0.0 of its potential returns per unit of risk. Sirona Biochem Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Sirona Biochem Corp on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Sirona Biochem Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

US Financial 15  vs.  Sirona Biochem Corp

US Financial 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Financial 15 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, US Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sirona Biochem Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sirona Biochem Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sirona Biochem showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Financial and Sirona Biochem

The main advantage of trading using opposite US Financial and Sirona Biochem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial position performs unexpectedly, Sirona Biochem can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sirona Biochem will offset losses from the drop in Sirona Biochem's long position.

The idea behind US Financial 15 and Sirona Biochem Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.